Commentary: Onerous state licensing laws raise barriers to some professions

Posted: December 9, 2016 - 3:01 AM

By Ed Timmons

With Election Day behind us, our public servants must now turn to the task of what they were elected to do: fight for the best interests of the people they represent.

It can be presumed that most people want opportunities to improve their lives. But in the Keystone State, there are still many barriers that make it more challenging to do so, particularly for those with low incomes. The unemployment rate, which is more than half a percentage point higher than the national rate, is an indicator that many are still being left behind in the state's economy.

There are a number of factors that may explain the reason for this. Unnecessarily onerous licensing laws for far too many occupations are likely a contributing factor. According to the U.S. Bureau of Labor Statistics and similar research institutions, occupational licensing laws affect anywhere from 22 to 29 percent of American workers nationwide. In Pennsylvania, more than 20 percent of the population is affected by these laws and many are low to middle income.

The massage therapy industry is a microcosm of an entire field of professions suffering from too much red tape.

Pennsylvania is one of 41 states and the District of Columbia that requires aspiring massage therapists to receive the government's permission to work. Adding to that burden, Pennsylvania is one of only two states to require three exams for licensure, with most states mandating only one test. Nearby Massachusetts doesn't require any exams.

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Licensing fees can also be a deterrent, particularly for those who already are low-wage earners. Pennsylvania charges $300 in licensing fees, about $120 more than the national average and the fifth highest in the country. It might be surprising that you can find something cheaper in New York, but in this case you can, with licensing fees set at $115. These restrictions narrow economic and professional opportunity, particularly for those who need it most.

In addition to erecting arbitrary barriers to entering the profession, licensing may also be hurting consumers as well. Three years ago, the Journal of Law and Economics published a study that Robert Thornton of Lehigh University and myself conducted on the effects of massage therapist licensing. Our investigation indicates that occupational licensing is associated with massage therapists earning as much as a 16.2 percent wage premium. This wage increase suggests that consumers are likely paying a higher price for massage therapist services.

Proponents of occupational licensing will argue that the laws are protecting the public - making sure that massage therapists are not inflicting harm and are properly trained to do their job. Research, such as a comprehensive white paper issued by the White House last year, notes that for some occupations there is little empirical evidence that licensing improves the quality of services delivered to consumers. In fact, consumers are sometimes paying prices that are 3 to 16 percent higher due to licensing without any improvement in what they're paying for.

Although California is not always the best role model for policy, Pennsylvania could learn a lot from its regulatory structure for massage therapists.

Instead of requiring licensing, California, along with Indiana and Virginia, have a certification law. If consumers believe that massage therapists that pay fees and complete educational requirements are of better quality, they can visit a "certified massage therapist." Consumers are also free to choose services from uncertified professionals as well.

With the abundance of online review sites today, it's relatively easy to gauge quality. In fact, six states do not regulate the massage therapist profession at all and haven't had significant complaints regarding poor massage therapy services.

Part of the challenge of analyzing a state's occupational licensing requirements continues to be a lack of sufficient data. At St. Francis University, we have established a new Center for the Study of Occupational Regulation that will identify and highlight disparities such as massage therapist licensing in Pennsylvania and nationwide.

With a new toolkit of information, perhaps newly elected policy makers in the Keystone State and nationwide will do the right thing and reconsider the costs and benefits associated with occupational licensing.

Edward Timmons is an associate professor of economics at St. Francis University and the director of the Center for the Study of Occupational Regulation. etimmons@francis.edu